


Economics For Employees 



A Statement of the Problem 



By the Committee on 
ECONOMICS FOR EMPLOYEES 



Chairman 

Lee Galloway 
Vice-President, The Ronald Press Co. 



Copyright, 1922 

NATIONAL PERSONNEL ASSOCIATION 

20 Vesey Street New York, N. Y. 



$f 



I.A690 014 

m -4 1922 



Economics For Employees 

A STATEMENT OF THE PROBLEM 

Ownership, labor and management (the work of the entre- 
preneur) are the three fundamental functional divisions into 
which our economic life may be divided. Based upon these 
economic functions our modern social organization has erected 
a class structure consisting of — capitalist, laborer and enter- 
priser. This fact should be carefully considered, especially at 
the beginning of a study which attempts to isolate one of these 
factors with the purpose of preparing a course of instruction 
especially adapted to the isolated factor. From an educational 
point of view this division into capitalist, labor and manage- 
ment classes at once suggests three fundamental considerations 
— (1) That these three divisions represent three different types 
of interests corresponding to the three classes into which our 
economic society is divided, (2) that there are at least two 
different industrial and social environments — the laborers in 
one invironment, the capitalist in another, with the managerial 
class partaking of both environments, and (3) that there are 
two and possibly three grades of intellectual responsibility. 

All of these things must first be considered before a rational 
beginning can be made in determining either the content or the 
method of training in a course of economics for any or all these 
different classes. 

Adjustment Needed 

If our present teaching of economics fails to arouse the inter- 
est of the laborer and the business executive, it is due not to 
the content of the subject taught but to the non-adjustment of 
the materials of economics as taught to the inerests of the 
groups whose industrial environments and intellectual respon- 
sibilities are so different from each other and whose methods 
of acquiring knowledge are so far removed from the college 
system of instruction. 

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Business Versus College Objections in Teaching Economics 

This is no criticism of the college method. The colleges and 
high schools cannot change their fundamental purpose to please 
either the business man clamoring for more skilled workers or 
the socialist demanding more doctrine. Our educational institu- 
tions have a distinctly educational objective and its end can be 
reached only through rigorous thinking based on sound pedag- 
ogical method. There is perhaps no more erroneous conception 
than to suppose that an educational institution is primarily a 
fact factory which uses the mind of the student as a "stores 
system" to be stocked for four years with information that is 
to be "delivered again upon requisition" as called for by the 
process of practical life. "Facts" in a college are primarily 
for consumption and not for storage and the product into which 
they are worked is a "scientific mind." Facts in a shop are 
likewise for consumption but woe to the operative who thinks 
he is done with them when they have served an intellectual 
purpose. What the business institution wants is facts worked 
into a "scientific product" and he expects the operative to 
deliver the information when called for. This difference of the 
objective of educational institutions and business institutions 
has caused most of the confusion regarding the effectiveness 
of our high schools and colleges. But facts cannot be used to 
develop power and to build machines at the same time. If the 
business man wants the schools to send him storage batteries 
of power he should be willing to go some other place to order 
his machines. The whole question is simply one of the con- 
version of energy. If facts are to be used to develop power, — 
a scientific mind, — the habit of logical thinking — the faculty of 
judgment — or any of the terms which mean the same thing as 
power — why, then, they cannot be used to make machines which 
when set going will work automatically without a set of work- 
ing instructions. A factory manager does not expect the central 
station plant to send him both electrical power and dynamos — 
nor would he hold the central station responsible if he ordered 
power and then without the proper connections turned the live 
wire loose to squirm and writhe and twist and spit about the 
floor. He would not expect it to turn wheels or belts until 
put under proper control and given proper direction. If col- 
leges are to be criticised it should be along the lines of educa- 
tional content as represented by the kind of facts they are using 

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to develop power — also some of our institutions are using over- 
shot wheels of classical design to grind their grist when modern 
conditions are calling for turbine design and high pressure 
methods. But this is another story. However, the above dis- 
cussion was not made simply as an explanation of position 
regarding college education. It serves also as a statement of 
differences which must be considered in selecting the materials 
and adopting methods suitable for the economics that the em- 
ployee group in industry should be furnished. The purpose of 
employee training is the development of operating efficiency. 
The development of the mind is the province of the school and 
college. 

For while the employer should never become indifferent to 
the mental development of the employee, especially the young, 
nevertheless the objective of business enterprise is to make the 
income exceed the outgo as a result of the operation. Hence 
any system of employee training should tend to make the em- 
ployee a more efficient production unit. Any scheme for train- 
ing the employee in the principles of economics which loses 
sight of this objective will and should lose the support of the 
business executive. The training of employees should be held 
to the same rigid test as that given to the training of the owners 
and managers of industry. Does it pay? That is, does the 
training add to skill, the judgment or co-operative spirit of the 
individuals for whom it is intended, thus enabling the busi- 
ness unit to operate more efficiently? 

If this test is used, the mistake of trying to adopt college 
methods and objectives in industrial and commercial concerns 
with business objectives may be avoided. 

Would Teaching of Economics to Employees Pay? 

In applying this test to economics for employees we at once 
narrow the field of discussion to start with to the question : 
Does it pay? The answer does not need statistics today. All 
that is needed is another question : What would have been 
saved to the world and to Russia in particular if the working 
classes had understood the full economic meaning of such an 
elementary principle, as "you cannot eat your cake and have 
it too !" ; or what might have been the gain to the world if the 
German working man had cast his influence upon the side of 
economic wisdom which counseled "what profit is there for a 

5 



nation if its people gain the whole world politically and lose 
its spirit of industrial enterprise" or to bring the illustration 
nearer home, what is the last coal miners' strike and the last tie 
up of our transportation system costing us, and could this have 
been avoided if the laborers had understood that other ele- 
mentary economic law that wages come out of product and not 
out of capital? 

But these and other recent tendencies have about convinced 
the business executive that a knowledge of economics is not 
only good for the laborer but equally good for himself. It is 
not necessary to prove the importance of economics. The ques- 
tion he would like to have answered is— In what way will the 
subject aid me in gaining greater industrial efficiency? Will 
a knowledge of economics add to the skill, aid the judgment, 
or promote the co-operative spirit of the laborer? This ques- 
tion may be answered from many angles, but from the point 
of view of operating efficiency it may be said that a knowledge 
of economics will add skill to the management because it be- 
comes a part of the manager's technique in handling men ; it 
will aid the executives by broadening the scope of business 
policies ; it will promote co-operative effort among employees 
by more clearly defining for them the objectives of all business 
effort and showing them the part each economic factor must 
play in producing that surplus from which each must draw its 
reward in proportion to the amount he has contributed. 

This brief analysis shows us how completely dependent we 
are upon the recognition of the three fundamental classifica- 
tions into which our economic society is divided and referred 
to in the opening statement of this paper. The owners, the 
managers and the employees are each interested in economics 
but from a different point of view. Each will get from it in- 
creased efficiency but in different ways. It would be interest- 
ing to show the relationship between economics and each of 
these classes but our objective today is to find the relationship 
between this subject and the employee. 

How Can Employees Be Interested? 

Recalling then that the economic training of the employee 
must pay in dollars and cents by building up a more efficient 
operating unit through increased employee co-operation in work- 
ing with capital and the aims of management let us see what 

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problems arise in accomplishing such a result. Assuming that 
the owners and managers of our business enterprises are con- 
vinced , that more accurate and sounder economic information 
on the part of employees were desirable the first problem that 
arises is : How can the interest of the employees be gained 
so as to get them to study or accept the knowledge offered 
them ? 

The answer is not so difficult as at first surmised since similar 
queries have been propounded ever since teaching became an 
art — Find what economic interests lie bound up in the em- 
ployees' daily work and in the language of "John Anderson 
My Joe" begin at the tool point to unravel the thread that has 
been woven into the economic working- socks of the employee. 
Numberless illustrations might be used to show how the em- 
ployee can be rescued from his towerlike isolation on which he 
has been placed by soap box oratory, appeals to special prejudice 
and misplaced confidence in unscrupulous employers. But one 
suggestion must suffice. Take the waste that is caused by the 
use of a poor tool (be sure, of course, that the tool quality was 
not due to the management !) — Such facts put before the worker 
quantitatively would tie in closely with the positive features 
of individual saving which in turn leads directly into the heart 
of the subject of economic saving. To be sure I am not taking 
the time element into consideration nor the methods of pre- 
senting the facts or the means of holding the interest. These 
are all problems in themselves. But in time thoughtful men 
must see that production is the true purpose of industry, that 
what is needed is common effort and that the employer and 
employee are indissolubly linked in a common enterprise. 

Wages Question the Storm Centre 

It may be a long time before the owners, the managers and 
the employees sit down together and decide together what an 
individual concern will do regarding wages, working time, 
working conditions, and profit sharing, but surely that day 
will not be hastened by fighting the blind use of union force 
by blind force of capital. There are to be sure many other 
questions of economic importance than those connected with 
wages but the storm centre has settled around this element in 
industry and it would be poor judgment that put such questions 
second in any attempt to interest the employee in economics. 

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Education is the only universal solvent which can break down 
the walls of prejudice that have grown up between the laborer 
and the institution he works in and with. And a broader knowl- 
edge of economic laws is the only way by which the little gains 
of today, the short advance of tomorrow and so on, a little here 
and a little there, can be held as by a ratchet in the grip of a 
greater employee sympathy based on a broader understanding. 

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